Debate Fact Check: Is Congestion Pricing Regressive?

At Wednesday night’s second and final Democratic mayoral debate, Mayor de Blasio reiterated his contention that congestion pricing—the use of tolls to discourage driving on particular routes—is “regressive,” meaning it hits lower-income people harder than rich people.

The mayor cited this as a main reason for his opposition to Gov. Cuomo’s call to implement a congestion-pricing scheme to pay for transit upgrades. De Blasio, who has argued with the governor all summer over who bears the blame for subway and bus problems, instead supports a millionaires’ tax to improve that system.

Sal Albanese, the former Brooklyn Councilmember who faced de Blasio in the debate—one of four candidates challenging the mayor in the Democratic primary—said he “supports congestion pricing because it’s irresponsible not to do so.”

The history

Neither the toll nor the tax has a promising legislative history on its side. De Blasio in 2014 tried to get Albany to approve a millionaires’ tax to fund universal pre-kindergarten and then in 2015 asked for a “mansion tax” to offset the cost of renewing the 421-a tax break for developers; neither idea went anywhere. While Cuomo has yet to sketch out any of the details of his congestion pricing idea, a bid by Mayor Bloomberg to create such a tolling system failed to garner enough support in the legislature in 2008 to even get a vote.

De Blasio has been consistent in his skepticism about congestion pricing. He opposed the Bloomberg plan and has been cool for years to the MoveNY proposal, a comprehensive plan to expand the transit system and fund the work with congestion pricing in the form of tolls on the East River Bridges, which are now free.

The claim that congestion pricing is regressive was a factor in the 2008 debate.

The ideas

Any flat fee is going to represent a larger percentage of a low income that of a high one. If the New York Public Library charges me and Jeff Bezos the same 25-cents-a-day fee when we are late returning our respective copies of “Learning to Fly: The Autobiography of Victoria Beckham,” it’s going to take a bigger bite out of my assets than Jeff’s.

So, de Blasio’s logic goes, if you charge a $2.75 toll to drivers whether they are low-income or rich, it’s going to hurt the poor more. And since there are places of the city that are truly underserved by the transit system, some low-income people will have little choice but to stay behind the wheel and pay the toll.

That’s true as far as it goes. But the fact is car owners in general are richer than non-car owners in the city, and low-income people in New York City are much more likely to ride mass transit or car pool than drive a car to work, and are somewhat more likely to do so than wealthier people (see chart below, which is based on this Census data). So while low-income people who do drive could be hurt by the tolls, most low-income people won’t be. What’s more, low-income people will generally benefit more than rich people from the transit improvements funded by the toll because low-income folks depend more on transit.

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Share of income group’s commuters who …

Income	Drove alone	Carpooled	Used public transit
$1 to $9,999 or loss	14.68%	4.69%	58.07%
$10,000 to $14,999	16.01%	5.19%	58.71%
$15,000 to $24,999	18.00%	5.09%	59.94%
$25,000 to $34,999	22.02%	5.31%	58.30%
$35,000 to $49,999	25.67%	4.65%	56.88%
$50,000 to $64,999	27.06%	4.61%	54.59%
$65,000 to $74,999	28.50%	4.56%	54.29%
$75,000 or more	23.82%	3.85%	52.65%

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It is true, however, that people in different areas of the city could benefit more or less than others from the improved, toll-funded transit system (just as benefits from the current system are uneven). If the MTA uses congestion pricing revenue to create a world-class bus system in the Bronx, the redistributive effect will be obvious because bus riders have lower incomes, on average. If, instead, the MTA improves transit hubs in Midtown, the calculation becomes more complicated, because that work would benefit rich commuters as well as low-income ones.

It gets even more complicated if you think about how a range of income classes fare rather than just how the lowest-income groups make out compared with everyone else. If the middle class pays proportionately more than low-income people under the tolling scheme, that is progressive. But if commuting behavior means middle-class workers are more likely to pay the toll than the rich, then there might be a regressive element to the tolls. (And here’s where how one defines “middle class” is key. If your household income is more than $150,000, you’re in the top 13.6 percent of the city, probably not anyone’s idea of middle.)

Remember, though, that the city already charges a regressive sales tax when people buy, say, a new car. There’s also a federal gasoline tax that funds highway and transit projects around the country that charges the same rate to poor and rich alike, and could be considered regressive. So low-income drivers already pay regressive fees. Heck, the fee you pay just to ride the MTA is regressive. A key question would be whether the new mix of charges under the Cuomo plan is more or less regressive than what exists now.

A 2009 RAND study found “there is no single answer to the question, ‘Is congestion pricing equitable?'” but it did draw two conclusions that apply directly to the situation now faced in New York:

If regions spend revenues in ways that benefit low-income individuals, congestion pricing is more likely to be progressive. However, if regions use revenues in a way that benefits all individuals equally, congestion pricing may be, overall, regressive. This is the strongest finding in the economic literature.

Second, even when low-income and other transportation-disadvantaged groups benefit as a whole from congestion pricing, it is very likely that some individuals will still be worse off. These include people with no choice but to drive on congested routes with pricing in effect and those who may have to forgo important trips because they are too expensive. However, many of these same people are also disadvantaged by the current transportation system, and assessments of equity should take this into consideration.

It’s fair to add, of course, that the millionaire’s tax is definitely progressive.

However, congestion pricing has going for it the fact that it incentivizes transit use over driving, and therefore reduces the human and financial impact of traffic, decreases carbon emissions and enlarges the constituency for better transit.

The verdict

Although he didn’t do so Wednesday night, De Blasio has at times in the past few weeks said he’s waiting to see the details of the Cuomo congestion-pricing plan before taking a final position on tolls. That implies what the facts above indicate: that while congestion pricing viewed narrowly can look regressive, and under certain circumstances could even be regressive, it’s not necessarily regressive—especially when it’s funding a transit system that serves millions of people with low- and moderate-incomes.

What the mayor said wasn’t inaccurate so much as incomplete—sort of like those vague announcements the conductor makes about how it’s an “earlier incident” that is ruining your day.